Recently, Michael Bartolic obtained a victory in a pension claim on behalf of a former employee of KONE, Inc. Individuals in Chicago and around the rest of Illinois who are participants in employer-sponsored pension plans and find themselves in a dispute over pension benefits usually have a dispute over interpretation of a provision or definition in the pension plan. In Michael Bartolic’s victory over KONE, that was just the case.
In Haynes v. KONE, Inc. Employees’ Retirement Plan, No. 21 C 6647, 2024 WL 3201271 (N.D. Ill. June 27, 2024), Mr. Haynes worked for KONE, Inc. from 1976 to 2021. In 2011 through 2015, KONE sent Haynes on a temporary foreign assignment to work for its subsidiary in Canada. Haynes’ employment contract for the time he worked in Canada provided him a guaranteed net salary and bonuses after taxes. KONE’s pension plan allows accruing pension credit while on such a temporary foreign assignment, and states the participant will be credited with “Compensation,” as defined in the plan, the same as if the participant worked in the United States. The plan has only one definition of “Compensation,” upon which the pension accrual formula is based. The “Compensation” is defined as “total base salary or other wages actually paid, plus overtime and bonuses . . .” During the time period Haynes worked in the United States, his plan-based “Compensation” was his gross wages and bonuses. But for the time Haynes worked in Canada, KONE credited Haynes with only the net, after tax salary and bonuses, despite payroll records showing KONE actually paid Haynes a gross salary and gross bonuses sufficient to result in the guaranteed after-tax net.
Following cross-motions for summary judgment, the court granted Haynes summary judgment and denied KONE summary judgment. The court held KONE’s process of crediting only net salary and bonuses during the assignment in Canada was arbitrary and capricious. First, KONE based its calculation of “Compensation” while Haynes worked in the U.S. on his payroll records showing he was actually paid a gross salary and bonuses, but it did not rely on payroll records for the time Haynes worked in Canada. Second, KONE’s Abroad with KONE policy document explain the Home country base salary and bonuses would be used for continuing pension contributions, further explaining how the pension plan may be applied. The court held KONE could have either credited gross Canadian earnings, or credited the Home country base salary and bonuses as “Compensation.” But the one thing it could not do is precisely what it did: credit only net salary and bonuses as “Compensation.”
If you have a denied claim for pension benefits, contact an experienced ERISA pension and retirement benefits lawyer today.